You wouldn’t try to sell your car to someone who has no interest in driving. So why would pitch your business to someone who is not interested in your type of business.
One of the most important things to understand is what you are offering to investors, and who is in the market for such an offer. There are numerous types of investors, investor groups, angels, and angel groups and each have their own investment criteria.
By understanding what your offer is to investors you can then identify which investors or angels would be interested in investing in your business. This gives you the opportunity to tailor to your offer and business plan to a narrower group of investors.
We have spoken with and dealt with a number of the angel groups and investor groups that you find on the Google searches. We speak to these groups to ascertain their investment criteria so we know which clients to refer to whom. When it comes to criteria, they invariable refer to three parameters:
Stage of Development
The type of investor will dramatically change depending on where your business is at. Some angel groups will take pre-commercialisation projects while other angel groups will only look at businesses with proven market offering supported by financial data. The general rule of thumb is the further along the stage of development the more investor groups will be interested and therefore the greater chance of investment success.
Industry
A lot of investor groups will limit their investment to specific industries. Individual angels tend to stick with industries they have actual experience or in-depth knowledge in.
Assistance required
The nature of assistance also determines who will be interested in your offer. Angels are traditionally more interested in matters where the assistance is knowledge and guidance, or a mix of this and capital investment. Investors and investor groups are more disposed to straight investment although many will insist of having some form of management control.
The business plan should have the above elements should be clearly expressed. It may be that when your offer is analysed, it is not suited to any of the investor groups or angel groups. It may however be a good candidate for crowd funding, or with a bit of lateral thinking, there could be other strategies to achieve your goals. There is always more than one way to skin a cat; you just have to make sure you have enough cats.
